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House prices rose 1.3% in November to a new record high
There was little movement for sterling yesterday, and what there was, was mixed, drifting slightly against the euro but building against the US dollar.
It was a tale of interest rates again. Governor of the Bank of England (BoE) Andrew Bailey agreed in an interview yesterday that four quarter-point interest rate cuts were likely in 2025. The OECD had said earlier that the UK was likely to need to maintain interest rates higher for longer than the US or EU.
This morning the Halifax has revealed a sharp rise in property prices. They rose 1.3% in November, against an expectation of 0.2%. This is close to the highest monthly increase in five years and takes the annual increase to 4.8%.
Back with currencies, the Australian dollar (AUD), weakened by between 0.5% and 2% against most pairings, following poor Gross Domestic Product (GDP) data that shows an underpowered economy.
No surprise that the South Korean won has also been a big loser, in a week when martial law was, briefly, declared. KRW has lost 8.5% to the pound in the past year, and 2% in the past week.
Stock exchanges have seen a clear example of a ‘Santa rally’, which may also have fuelled the pound’s strong showing – as GBP tends to rise with stock markets. The FTSE 100 is around 2.25% stronger than a month ago.
One improvement in the UK’s business outlook came from the S&P Construction PMI, which was upgraded to 55.2 yesterday. However, the high number is based on strong commercial growth and disguised a decline in residential building – the only sector in decline.
Right on cue, riding in like the 7th Cavalry to save the day, yesterday UK prime minister Sir Keir Starmer launched a Plan for Change, with six targets to hit by 2029. These include building 1.5 million homes via faster-tracked planning. The prime minister promised to take on the NIMBYs, saying that housebuilding was being “held to ransom” by “blockers and bureaucrats”. He said that the planning system is “a blockage in our economy that is so big, it obscures an entire future.”
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GBP: Early gains lost as week progresses
After two days of gradual gains, GBP/EUR fell away yesterday afternoon and reaches the end of the week where it started. It’s slightly more positive against other major currencies – USD, NOK, CAD – with 0.5% improvements. There is little to excite the markets on the data front until GDP next Thursday, although, with the near certainty of no further interest rate cut this year, even the high-level data releases are likely to have a muted effect.
GBP/USD past year
EUR: France’s problems fail to impact euro
The fall of Mr Barnier’s government had little impact on the single currency this week and any losses from Wednesday were recouped – and more – yesterday. The euro reaches the end of the week well up on all the dollars, especially AUD.
We will get a third estimate of eurozone GDP later this morning, but there is another quiet data week ahead.
EUR/USD past year
USD: Further falls for US dollar ahead of NFP
There were very few bright spots for the dollar yesterday as it lost between 0.25% and 0.75% against major rivals.
This afternoon, being the first Friday of the month, we’ll hear Non-Farm Payrolls. After last month’s worst numbers for years, a major bounce-back is expected.
USD/GBP past year
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